SEATTLE–(NASDAQ: RDFN) — Nearly one-third (31.4%) of U.S. home purchases were paid for with all cash in July, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s near the eight-year high reached in February and up from 27.5% a year earlier. The share of all-cash purchases jumped in early 2021 during the pandemic-driven homebuying frenzy and has remained elevated since then.
All-cash purchases are prevalent with today’s affluent buyers largely because mortgage rates have doubled from a year ago, reaching 6% in mid-September. Buyers who don’t use loans avoid high interest payments that exacerbate home prices, which remain near record highs even as the housing market slows.
All-cash purchases jumped in popularity last year because they allowed buyers to stand out among fierce competition: Bidding-war rates reached record highs in early 2021 due to sub-3% mortgage rates and remote work driving homebuyer demand. Remote work has also given more Americans the option to use all cash, as it allowed a record share of homebuyers to relocate, often from expensive to affordable parts of the country. U.S. home values have skyrocketed since the start of the pandemic, which means Americans who sell a home in a pricey place like San Francisco may use equity to pay cash in a more affordable area like Las Vegas.
